The Importance Of Brand Building And How To Create A Brand Identity

Identity: beyond the job to be done to define who you are

In the same speech in 1997, Steve Jobs was trying to revitalize Apple’s brand. As he got back to the company after being ousted more than a decade earlier, Apple’s sales had experienced a massive decline. Several CEOs were hired and paid millions just to make things worse.

Steve Jobs had pretty clear what had happened to Apple. As he highlighted:

The question we asked was our customers want to know who is Apple and what is it that we stand for where do we fit in this world and what we’re about isn’t making boxes for people to get their jobs done although we do that well we do that better than almost anybody in some cases but apples about something more than that.

And he went on:

Apple at the core its core value is that we believe that people with passion can change the world for the better. That’s what we believe and we’ve had the opportunity to work with people like that…and those people that are crazy enough to think they can change the world are the ones that actually do.

Beyond the inspirational quotes, Steve Jobs made an important point. In a tech-driven business world, where technological innovation might seem to be the main driver of success. And where digital channels make it easy to track your marketing strategy.

It’s very easy to get confused about the things that really matter. The rational and conventional approach, based on jobs to be done, starts from several assumptions that might make it hard to build a brand in the first place.

Some of those assumptions are:

• People always want convenience and low prices.
• If A is more functional than B, then everyone will want to have A, rather than B.
• Rationality is what drives people’s actions.
• What cannot be explained by rationality is either stupid, irrelevant, trivial or not worth our attention.
• Marketers are liars trying to manipulate people.
• Perceptions don’t matter as much as engineering.
• People are biased, and we need to leverage those biases.

I could go on listing dozens of those assumptions, but you get my point. In a tech-driven world, where tracking visible metrics has become inexpensive, those metrics become the key drivers of startups, that neglect their brands and focus on building functional products.

And the thing is, large tech players, with the most valuable brands in the world, are aware of the fact that their brand-building activities are a key element of their success. But they pretend those don’t count.

Companies like Alphabet (Google), Amazon, Apple, and Microsoft, spend billions of dollars in advertising, brand building, distribution, to pass the message that the reason they are so dominating stands with their superior technologies, innovation, supply chain or accounting department.

There is more to the story and this is called brand building. Referring to Nike, in the 1997 speech, Steve Jobs explained:

Trust: how do I trust you if you don’t “waste money” on branding?

A flower is a weed with an advertising budget. ― Rory Sutherland, Alchemy. 

Rory Sutherland, Vice Chairman of Ogilvy in the UK, in his book Alchemy, explains the evolutionary forces behind branding. As he highlights ever since science has become so powerful in explaining physical processes.

More and more intellectuals tried to apply the scientific method to real-life scenarios, where there is an extremely high degree of uncertainty. As former trader, Nassim Nicholas Taleb explains in his book Antifragile, in the real world, what’s really hard is understanding the problem in the first place.

Indeed, often we try to solve a problem that makes us look good but it’s the wrong one, we tend to apply rationality and logic (that look good on paper) to situations of high uncertainty. In short, as Jeff Bezos highlighted and recounted in a Shareholders letter in 2006:

We have made a decision to continuously and significantly lower prices for customers year after year as our efficiency and scale make it possible. This is an example of a very important decision that cannot be made in a math-based way. In fact, when we lower prices, we go against the math that we can do, which always says that the smart move is to raise prices.

In short, this is not a sort of decision that can be made with mathematical models, but it requires vision and the understanding of hidden facets of reality (which the human brain might be wired for).

Where Amazon is endowed with price elasticity models able to predict in the short-term that lowering prices has short-term negative consequences on the bottom-line, Jeff Bezos highlighted:

Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices creates a virtuous cycle that leads over the long term to a much larger dollar amount of free cash flow, and thereby to a much more valuable Amazon.com.

While this decision didn’t make much sense from a purely economic standpoint, it did generate the so-called Amazon Flywheel or virtuous cycle.

In short, there are certain decisions, where optimization is worth pursuing. And in these cases, quantitative and mathematical models do work well. In all the other cases, where there is a high degree of ambiguity and uncertainty, those models won’t work.

But there is more to it. In a scenario of ambiguity and uncertainty (as most of the important business decisions), Rory Sutherland highlights how psycho-logic plays a key role. In short, what seems irrational it has an evolutionary value that can’t be explained by logic.

Reputation and social proof: I show you who I am by telling you who you are

“capitalism is not “materialistic,” but “semiotic.” It concerns mainly the psychological world of signs, symbols, images, and brands,” ― Geoffrey Miller, Spent: Sex, Evolution, and Consumer Behavior.

Advertising and branding play a key role in building up trust. And we might argue that those are the backbones of capitalism itself. In short, larger companies that have a presence that goes beyond the neighborhood, need brands to thrive. And this is even truer in the digital age.

Imagining a train of thoughts of the person that engages with our brand and expensive branding campaign, the subconscious might implicitly say something along these lines “hey if you can afford to spend money on advertising your product, it must be good. And besides, you have money to allocate for that, which tells me you are financially more reliable. Thus I know you’ll be able to assist if the product won’t work and you’ll stick around long enough for me to trust you.”

In addition to that, branding has a social role, that Geoffrey Miller explains well, in his book, Spent:

All ads effectively have two audiences: potential product buyers, and potential product viewers who will credit the product owners with various desirable traits.

And as he explains in the same book:

The rich covet the new iPod not for the sounds it can make in their heads, but for the impressions it can make in the heads of others.

The power of perception: 2+2 does not equal 4

Engineers, medical people, scientific people, have an obsession with solving the problems of reality, when actually … once you reach a basic level of wealth in society, most problems are actually problems of perception ― Rory Sutherland, Alchemy. 

This isn’t easy to grasp and internalize, however, perception can enhance our products. However, perception isn’t just about improving the user experience, building more technical specifications in your product, or adding features.

Perception can be way cheaper to implement yet more powerful. However, it requires a shift in mindset, as things that might sound trivial, irrational or illogic will suddenly unveil their genius.

Coca-Cola knows that well when it developed a unique shape for its bottles. And that happened a century ago. As the story goes, when Coca-Cola wanted to preserve its brand, it invited its bottlers to come up with a “bottle so distinct that you would recognize if by feel in the dark or lying broken on the ground.“

Also, tech giants know that. When Google launched its search engine, its super-clean design, not only enhanced user experience. But it also signaled one thing (as Rory Sutherland explains in Alchemy) that Google was actually good at search!

So much so, that “google it” became a synonym for “search it” and it actually now became ever more used:

How “google it” has become more popular than “search it” (according to Google Trends). In short, not only Google has become a synonym with search, it has expanded its meaning, as it has made searching go mainstream, thus educating billions of people to google things out.

Signaling: how I look and what I do have nothing to do with how I look and what I do

“The peacock’s gaudy tail does not enable him to fly any higher, but it raises his status in the eyes of the peahen.” ― Nicholas Humphrey, Consciousness As Art.

If you think that showing off, advertising and branding are just synonyms of stupidity, let’s try to consider them from a different perspective. According to evolutionary psychologists, like Nicholas Humphrey, there are hidden reasons why we act the way we do, even when it seems irrational.

And it is often due to signaling. According to the signaling, theory from an evolutionary standpoint, those signals need to be costly. For instance, in the peacock case, the signal of fitness is so costly that it actually becomes a handicap.

According to the Handicap Principle,” reliable signals must be costly to the signaler, costing the signaler something that could not be afforded by an individual with less of a particular trait.”

Some evolutionary psychologists might go as far as saying that developing wings in the first place was for sexual selection and that flying was a side effect of that.

Thus, if you do understand signaling in that context, you also understand why it becomes important for brands as well to advertise themselves to become “fit.” And the best way to advertise themselves to choose to build a business that lasts.

Context and meaning

A last key principle to internalize is the importance of context in human decision making. The way we perceive things is driven by context. That might sound trivial, yet it is important to recall that wearing a mask or costume at the office on Halloween is acceptable (also among engineers) but wearing the same costume on a regular day would qualify you as a freak.

Understanding the kind of context people experience your product or service. Or determining the kind of context you want to create for your brand it is critical to building a successful brand.

The power of brand recognition

In a paper entitled Heuristic Decision Making, Gerd Gigerenzer and Wolfgang Gaissmaier highlighted how consumers might use brand recognition, which in some instances might be “even more important than attributes that are a more direct reflection of quality.”

As explained in the same paper, in a blind test, when choosing between a high-quality peanut butter to two alternative low-quality, most people picked the highest quality. However, when a brand label that people could recognize got attached to one of the jars, suddenly most of the people picked the brand they recognized.

The experiment might well suggest that brand recognition not only facilitates the choice, but it changes the perception and “taste” of the product itself. Almost as the brand name is creating a parallel reality in the consumers’ minds which goes beyond the ingredients. 

Value: the sweet spot between pain and perception

In a tech-driven business world, it’s easy to fall in love with theories that focus too much on problems and pain points and lose sight of the importance also of demand generation. 

Companies like Nike, know that extremely well, and that is why they spend billions in “demand generation:”

To be sure, this is not an invitation to overspend on marketing. Rather, it’s an invitation to look beyond what your customers are currently telling you so that you can pass their expectations.

In the end, the value as a business is also given by the fact that you can experiment and challenge assumptions around what people really want. And this is at the core of Customer Obsession, which Amazon has been using as North Start since its inception:

Part of the process is about uncovering problems customers have. Another good part of it is about a discovery process, of serendipitous insights. The company stumbling upon them will also reap the benefits on its bottom line, as a side effect.

Therefore, the business able to devote part of its time and resources to explore value beyond the narrow boundaries defined by existing customers, might also benefit from a burst of innovation, and leap ahead of the competition, thus creating a blue ocean: